London lettings and estate agent, Benham and Reeves, supports a petition calling for the government to reinstate tax relief for landlords, allowing the full amount of mortgage interest to be set against rental income before tax is calculated.
Tax credits, which came into force as of April 2020, resulted in landlords no longer being able to deduct any of their mortgage interest from their rental income when calculating the taxable profits of their investment.
Instead, a 20% tax relief on mortgage interest payments was implemented, a change that has severely reduced the profitability of buy-to-let investing, along with a string of other legislative changes such as an increase to buy-to-let stamp duty costs and, more recently, changes to Capital Gains Tax allowances.
The petition has already gained almost 31,000 signatures since and can be found at: https://petition.parliament.uk/petitions/627785
Director of Benham and Reeves, Marc von Grundherr, commented:
“Rather than commit to solving the housing crisis and build more homes, the government has looked to bring about a short term fix by forcing landlords to sell up and exit the buy-to-let sector.
This has been orchestrated via a number of legislative changes designed to dampen the financial returns available to investors.
Of course, the consequence of this is a reduction in suitable rental properties and with the sector already in dire need of more stock, it’s the nation’s tenants who are paying the price.
High demand is already pushing rents ever higher and as more landlords exit, this problem will only get worse while the quality of available accommodation will also continue to decline.
We’re urging the government to reconsider just one of their recent changes and allow landlords to once again deduct their mortgage interest from their rental income and we’re not alone.
It’s time the government realises that the nation’s landlords are the backbone of the private rental sector, but it’s simply not realistic to expect them to play such a vital role if it’s not financially viable.”
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